Donald W. Duda - Chief Executive Officer, President and Director Douglas A. Koman - Chief Financial Officer, Principal Accounting Officer and Vice President of Corporate Finance

David Leiker - Robert W. Baird & Co. Incorporated, Research Division Jeremy Hellman - Divine Capital Markets LLC, Research Division Gregory M. Macosko - Lord, Abbett & Co. LLC

Welcome to the Methode Electronics Fiscal 2012 Fourth Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. This conference call does contain certain forward-looking statements, which reflects management's expectations regarding future events and operating performances and speak only as of the date hereof. These forward-looking statements are subject to the Safe Harbor protection provided under the securities laws. Methode undertakes no duty to update any forward-looking statements to conform the statements to actual results or changes in Methode's expectations on a quarterly basis or otherwise. The forward-looking statements in this conference call involve a number of risks and uncertainties. The factors that could cause actual results to differ materially from our expectations are detailed in Methode's filings with the Securities and Exchange Commission, such as our annual and quarterly report. Such factors may include without limitations, the following: dependence on a small number of large customers, including 2 large automotive customers; dependence on the automotive, appliance, computer and communications industries; further downturns in the automotive industry or the bankruptcy of certain automotive customers; ability to compete effectively; customary risks related to conducting global operations; dependence on the availability and price of raw materials; dependence on our supply chain; ability to keep pace with rapid technological changes; ability to avoid design or manufacturing defects; ability to protect our intellectual property; ability to withstand price pressure; the usage of a significant amount of our cash and resources to launch new North American automotive programs; location of a significant amount of cash outside of the U.S.; currency fluctuations; ability to successfully benefit from acquisitions and divestitures; ability to withstand business interruptions; unfavorable tax laws; ability to implement and profit from newly acquired technology; and the future trading price of our stock. It is now my pleasure to introduce your host, Don Duda, President and Chief Executive Officer of Methode Electronics. Donald W. Duda: Thank you, Manny, and good morning, everyone. Thank you for joining us today for our fiscal 2012 fourth quarter financial results conference call. I am joined today by Doug Koman, Chief Financial Officer; and Ron Tsoumas, Controller. Both Doug and I have comments, and afterwards, we will be pleased to take your questions. For fiscal 2012, sales of $465 million and earnings per share of $0.22 met our financial guidance. We are pleased with our year-over-year consolidated sales growth of 8.6% driven primarily by our Automotive segment, which was offset by declines in our Interconnect segment, a direct result of continued softness in the appliance market and the sale of our optical business in the fourth quarter of last fiscal year. In the quarter-over-quarter comparison, consolidated sales grew 5.9%. Again, strength in our Automotive segment offset challenges in our Interconnect and Power segments. We posted full year net income of $8.4 million or $0.22 per share compared to $19.5 million or $0.52 per share in fiscal 2011. For the fourth quarter of fiscal 2012, net income was $5.8 million or $0.15 per share compared to $10.2 million or $0.27 per share in the same period, fiscal 2011. For both periods of fiscal 2012, net income was negatively impacted by higher foreign income taxes. For the full year of fiscal 2012, income taxes decreased net income by approximately $0.09 per share compared to fiscal 2011, where the tax benefit contributed $0.11 per share, which resulted in a $0.20 EPS swing year-over-year. Additionally, there were other events which skewed the year-over-year net income comparison in the full-year period which are detailed in our release this morning. As we have discussed over the last several quarters, design, development and launch costs in both our Automotive and Power Products segments continue to impact net income and gross margins. Additionally, vendor production and delivery issues and increased sales of products with a higher prime cost further affected our North American Automotive income. In total, the development and launch costs and vendor charges lowered our fourth quarter net income by approximately $1.7 million or $0.05 per share and lowered our gross margin by 1.3 percentage points. In the full year, these costs and charges lowered net income by $7.9 million or $0.21 per share and lowered our gross margins by 1.7 percentage points. While vendor production and delivery issues for the Ford center console program impacted fiscal 2012 by $3.3 million, we made significant progress throughout the year to vertically integrate Advanced Molding and Decoration or AMD. The integration of the GM intricate paint process for automotive center consoles is successfully producing decorative components for approximately 40% of the Ford products we supply, with the balance expected to produced by the second quarter of this fiscal year. The team is now focused on the Ford paint line to be used for the General Motors center console components. Once the integration is complete, the charges associated with the vendor production and delivery issues should be eliminated and gross margins should improve. Additionally, our Ford center console program currently carries a higher prime cost due to the high purchase content, which reduces the program's overall gross margins. In fiscal 2012, our production of Ford center consoles doubled over fiscal 2011. Therefore, even though sales increased, our margins decreased due to the increased sale of products with a high prime cost. This should also be mitigated by the vertical integration. We also incurred costs related to the design, development and launch of the General Motors center console program for the next generation of truck platform. In fiscal 2012, we incurred $4.6 million for the launch of automotive programs and anticipate approximately $4.5 million during this fiscal year in total launch costs for the General Motors program. The majority of those costs occurring in the first 2 quarters of fiscal 2013. These costs will ultimately absorb as the product launches and revenue is realized, which will begin in the fourth quarter of this fiscal year. While these costs are having an impact on our results now, the General Motors center console program had a total anticipated revenue in excess of $0.5 billion over the life of the program. Finally, in our Power Products segment, product development costs for Eetrex were approximately $0.6 million in the fourth quarter and $2.4 million in the full year. We estimate similar development costs for fiscal 2013. This investment will result in a suite of products applicable to a wide variety of applications for not only e-vans but also stationary power systems. Specific to stationary storage, we are developing a solution that will move battery backup from being -- not being just an insurance policy to an active battery solution that will reduce energy cost and improve data center performance. Now turning to our review of our individual segments. In the fourth quarter, Automotive net sales increased to 12.7% and in the full year improved over 20% due to the higher sales from the Ford Center console programs, as well as from our transmission lead frame and steering angle sensor products. The acquisition of AMD, contributed almost 46% of the North American Automotive sales increase in the fourth quarter and 40% in the full year. It is important to note that AMD was breakeven at the gross margin level. Automotive segment gross margin decreased in the fourth quarter and full year comparison, impacted by the vendor issue, the higher prime costs for the Ford Center console, costs related to the launch of the GM program and AMD sales at breakeven. Again, our targeted gross margins for automotive are low- to mid-20s, which we anticipate reaching once the General Motors center console program is fully launched in the first quarter of fiscal 2014. Of note, Methode was successful in negotiating a $1.2 million investment tax credit for fiscal 2012 from the Maltese government. Interconnect sales decreased approximately 1% in the fourth quarter and 8% in the full-year comparisons, attributable mainly to lower appliance sales in North America, as well as the sale of our optical business in April of last year. These lower sales were partially offset by increased sales of data and safety remote control products. As we mentioned last quarter, we anticipate reduced appliance sales will continue through the first quarter of fiscal 2013. However, as we also announced last quarter, TouchSensor has been awarded the touch user interface for a larger client's OEM laundry platform. The platform, which launches in the second quarter of this fiscal year, will be used on multiple major brands and represents $30 million to $40 million in annual revenue and full run rate fiscal 2014. We are anticipating sales of approximately $15 million to $20 million in this fiscal year. Interconnect gross margins fell on the fourth quarter and full year, again, due to lower sales. Our Power Products segment saw approximately 11% lower sales in the fourth quarter due mainly to lower product demand from a key customer and the full-year sales improved just over 3%. We are cautiously optimistic that first quarter sales will improve modestly over the fourth quarter. Power Products gross margin decreased in both reporting periods mainly due to product mix and the Eetrex product development class. Additional gross margins were impacted by the loss of a customer, who qualified a less costly alternative which Power Products did not offer. Without the new product development class, gross margin would have been 18.5% in the fourth quarter and 21.2% in the full year. Our target gross margins for this segment is in the high-20s, which we anticipate achieving in fiscal 2014 as more products launch. Now moving to see -- moving to what we see for the next several quarters. Although, we ended fiscal 2012 with strong sales performance in the fourth quarter, we anticipate the first quarter of fiscal 2013 to bring lower sequential sales, as the first quarter is typically our weakest sales quarter. These lower sales, in conjunction with the costs associated with numerous new product launches, is expected to result in modestly above or below breakeven earnings per share this first quarter of fiscal year 2013. However, in the second and third quarters, we anticipate the launch of TouchSensor's laundry platform, along with the launch of multiple automotive products in Europe, will boost second and third quarter sales and earnings. Product launching in Europe includes busbars for Nissan and Renault electric vehicles, steering wheel and hidden switches for Ford and ergonomics, which is for Volkswagen, Jaguar and Fiat. In the fourth quarter, the launch of the General Motors center console program combined with the second and third quarter launches of the laundry program and automotive programs in Europe, it's anticipated to make that quarter our strongest in sales and earnings for fiscal 2013. This anticipated progression throughout fiscal 2013 is in line with our original projections. As such, we are reiterating our full-year fiscal 2013 guidance of $495 million to $525 million in sales and earnings per share of $0.52 to $0.67. We remain on track for record sales of $630 million in fiscal 2014 and over $700 million in fiscal 2015. Now let me summarize some of the product development and new business awards and opportunities that occurred in the fourth quarter. Our European Automotive operations booked $7.8 million during the fourth quarter in new business, closing fiscal year 2012 with over $40 million in new annual business, peaking at fiscal year 2015. This business includes expansion of programs with Ford and Fiat as well as new awards for Renault's electric vehicles. In Interconnect, TouchSensor has made significant progress on cost reducing one of the key elements of their products, specifically through its work with another Methode division, TouchSensor has developed a new capability to digitally print circuits directly to connectorized substrates. This approach, while still at the concept stage, could potentially replace primitive circuit boards TouchSensor normally uses to carry the touch technology and reduce or eliminate one of the most expensive elements of its billed materials. Also in Interconnect, electronic recently demonstrated its new ruggedized touch screen at a recent trade show, which was well received by multiple customers. Electronic also received prototype orders for radio remote controls for a welding system and a bridge crane as well as receiving its first production order for an explosive-improved controlled system for oil load to meth heads from a large energy-related company. In our Power segment, we have received new awards for a variety of products including heat sinks and busbars that will launch in fiscal 2014. The group also had several wins for a new liquid-cooled chill plate designs, which demonstrates the group's move in developing higher -- highly engineered solutions. In summary, with all this -- all the activity this year in launching new programs, we also continued to focus on developing new technologies and processes which is a key element of our long-term strategy of providing our customers technology that enhances their products and our competitive position and ultimately results in improved margins for Methode. Now I will turn the call over to Doug, who will provide further details regarding our financials. Douglas A. Koman: Thanks, Don. Good morning, everyone. Since we provided sufficiently detailed information about -- and affecting our consolidated segment results in both the press release and the 10-K, I'll keep my comments very brief today. Let me talk about cash was a little bit -- Don mentioned that, that resulted in about a $0.20 EPS swing from last year to this year. In fiscal '12, we've reported a tax provision of $3.2 million, that's an effective tax rate of about 28% and that was primarily comprised of $3.1 million for taxes upon won profits primarily in China and the Philippines. We also had $2 million of withholding tax expense, on dividends paid out or going to be paid from our subsidiary in China to our Singapore subsidiary. Those 2 items were offset by $1.2 million benefit from negotiating the monetization of the tax credits related to our Malta operation, Don mentioned that in his comments. And also we have an additional $700,000 tax benefit due to the change in the valuation allowance for unused investment tax credits in Malta. Last year in fiscal 2011, we recorded a tax benefit of $4.1 million. That was primarily comprised of $2.1 million foreign taxes on our foreign profits. We also had a $2.7 million benefit primarily related to the expiration of the statute of limitations on certain tax reserves and also a $3.5 million benefit related to the sale of our 75% ownership in Optokon. Looking forward in -- to 2013, we would expect our effective tax rate to be in the low- to mid-teens. This assumes no significant change in the valuation allowances or unused investment tax credits in Malta or for the net operating losses in the U.S. Even though the tax rate in China increased to 25% from 12.5% effective January 1 of this calendar year, we still see the fiscal 2013 consolidated effective tax rate to be reduced as we see increased profits in Europe and better sheltered by investment tax credits or lower tax rates. And we continued to benefit from lower -- from the net operating loss carryforwards in the U.S. Looking at cash flow. We generated $24.8 million cash from operating activities this year compared to $17 million last year. Looking at CapEx, in fiscal 2012, we spent $32.1 million for capital expenditures and acquisitions. Of this amount, $6.4 million was for the acquisition of AMD. Looking at fiscal 2013, we expect to spend somewhere between $25 million to $28 million for capital expenditures in the year and with most of that front-end loaded in the first half of the fiscal year. For fiscal 2012, our depreciation and amortization expense was $16.2 million. Looking at fiscal 2013, we expect depreciation and amortization to increase to between -- somewhere between $18 million and $20 million for the year. Looking at debt. At the end of fiscal '12, we had $48 million borrowed against our line of credit. Currently, most of our cash is located outside the U.S. While we eventually expect to generate cash in the U.S. primarily through future domestic operations, it will be necessary to continue to borrow from our foreign affiliates or under the credit facility for the near term. Management continues to work with its consultants to review efficient opportunities to repatriate cash back to the U.S. In line with the review of those opportunities to repatriate cash, we did look at our accounting assertion with respect to foreign earnings. Methode considers all of its foreign earnings to be permanently reinvested in those foreign operations. In the fourth quarter of fiscal '12, however, we identified $38 million of undistributed foreign earnings for repatriation to the U.S. We therefore recorded the deferred tax expense of $9 million. This expense was offset or reduced in our net operating lost valuation allowance by the same $9 million. Therefore, there will be no income statement impact in the quarter. The ability to bring this cash back to the U.S. will help pay for capital and other expenditures anticipated to be spent to design, develop, engineer and launch the General Motors center console program and will reduce the amount of additional borrowing under our credit facility. Don, that concludes my remarks. Donald W. Duda: And Doug, thank you. Thank you very much. Manny, we are ready for questions.

[Operator Instructions] And our first question is from the line of David Leiker with Robert W. Baird. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Let's start the discussion here on the launches and how they're going at Ford. Are you at the point now, from a Ford product perspective, that most of those are behind you and that you're running at a pretty normal rate there today? Donald W. Duda: That is correct. Both U car and D car [ph] are launched. So now we are -- we're at full launch and really the only issue that's left is to complete the vertical integration of the painting. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then the GM launches, when do you start incurring cost on that? Do you -- you said that's going to be Q1 and Q2 predominantly? Or Q2 and Q3? Donald W. Duda: Q -- well, we've been incurring them for the last year but it will ramp here in Q1 and Q2. And then ultimately, we'll launch in the fourth quarter. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: And then how much of what you learned in the foreign launch can you leverage into the GM launch, to sort of derisk that launch for you? Donald W. Duda: I think the lessons learned on the Ford launch in which were much more complicated from a painting standpoint, we'll pay -- I think as evidenced as we launch GM. Potentially, Methode has learned how to paint and laser etch on a volume basis of very intricate several pass painting. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then in terms of what your launch with GM, is there any new technology or manufacturing process there that could be a potential concern? Or what'd you learned from Ford to get you over the hump on those? Donald W. Duda: I would say -- I don't think there is anything new there that's higher volume but we're used to that. I can't go into product too much. But I would say, there's nothing -- there's no new technology being launched on -- well, let me stop there, to work with -- GM has not announced all of the product configurations. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then just a real near-term thing, as you look at -- across some of your businesses that have relatively short cycle, Automotive side, you look out of and get more -- couple months or so. In terms of changes in production schedules, incoming orders, what are you seeing there? Are things getting better or are they getting worse or stabilized? Douglas A. Koman: In the U.S., I would say that things have stabilized. In Europe, that tends to vary month-to-month. In Malta, vertical has a number of smaller -- smaller relative to GM and Ford, smaller product launches. And so, those tend to be a little more volatile and a little less predictable. But in the aggregate, Europe we're seeing is a little soft. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then the last item here. As we look -- I don't know that you guys, if you put this number together, presented it this way at all. But if we look at your new business launches, your incremental revenue here in the next couple of years, have you gone through it, presented those at all in an annual basis of -- like as '13, '14, '15? Donald W. Duda: Yes, we have. And we've outlined, I think, what the Ford launches have done and what GM, I believe we discussed laundry. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Yes, I'm thinking more in -- that you put those together in aggregate but the new --six months ago or so that you put the numbers out there, what you expect your revenues to be from new business to be. And you've announced new things, since then-- I'm just curious whether you've updated that. Donald W. Duda: We've not updated it since last November. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Okay, that was more my question, particularly. Okay great. I'll come back with a couple of other ones.

[Operator Instructions] Our next question is from the line of Jeremy Hellman with Divine Capital Markets. Jeremy Hellman - Divine Capital Markets LLC, Research Division: First one for me, just kind of thinking about business that you're pursuing for over the course of the next year that would come in a few years. Hence, do you have -- can you give us any sense of the GM scale, either on auto or even on the appliance side? Do you have anything that you're working on that might layer in as we think in a few years out beyond what's already in the plan? Donald W. Duda: No. Mainly Auto business, we're looking at model years, '15, '16 and '17 now, both on Auto and -- appliance is probably a little more near-term but we're probably looking for -- now, so let's just say '15 in the plans as well. Continuation of our business with Ford and GM, moving center consoles into other OEMs, we're pursuing that. But really, we can't give you the details on that but that's really our -- our strategy is to continue in Auto, in the center console area and also in the transmission area, which represents -- from our Ford sensing technology that should -- we're launching our first sensor in '15, that will reach full ramp in '16 and that could carry over -- that goes into '17 and '18, those tend to be 6-, 7-year programs. Lead frames, we continue to pursue those. T-76 transmission has been well received. So we're seeing -- we've got really 2 plants for producing that now. In the appliance area, laundry is a new area for us so we're anticipating that that's well received by the consumer that will see the business there. And then Malta continues to pursue not only its standard hidden and ergonomic switches but the power as well. So we're -- our intent, we've said we'll reach over $700 million, and our intent is to keep that going. We have the -- we certainly have the opportunities to do that and of course, we need to book them. But -- and obviously, launching all these programs successfully goes a long way to giving confidence to our customers that we can take on more business. Jeremy Hellman - Divine Capital Markets LLC, Research Division: Okay. And you mentioned the investments you're making in Eetrex. Once you've gotten to where you got the technology where you want it, what about the scale of business that you're going to be pursuing there? And are we talking $20 million, give or take, type of stuff? Or more a 9-figure type of potential business? Donald W. Duda: I mean, there's 2 areas that we're -- 2 main areas we're pursuing that I mentioned in my prepared remarks, the e-vans, that's developing slower than we anticipated but we also see that, that is commercially viable. And there, you could have one program that's $10 million or $20 million depending on, again, how the customer's product is refit. Stationary storage, which is perhaps a more near-term market, that's a -- as data centers and others transition away from lead acid batteries, that's a -- that could be a $100 million opportunity market if that becomes a wholesale chain within the marketplace. So we're not looking for Eetrex. A better way of answering is we're not looking for Eetrex to be a $10 million, $20 million subsidiary of Methode. We're looking forward to reach -- Power in general to become a significant segment. Jeremy Hellman - Divine Capital Markets LLC, Research Division: Okay, very good. And then one more for Doug. Just Doug, in terms of drawing down on your revolver and then the cash overseas, what -- I'm trying to think about it in terms of the either positive or negative carry that you've kind of net-net have with the situation. And then the $38 million of repatriation funds, was that subsequent to year end? Or is that prior to year-end closing and already in the balance sheet? Douglas A. Koman: No, that, that will be prospective, the $38 million or so. And I think what -- we've talked about cash in the past, Jeremy and the fact that we've -- in the last couple of years, especially with our restructuring and the downturn in the market here in the U.S., that we saw a lot of our profits are building up offshore and also cash building up offshore. With the launches that we had in North America for GM and Ford, the TouchSensor opportunities, that put a demand on domestic cash which we decided to borrow cash under the revolver there, which -- it's a cheap debt. And we've got to the point in the fourth quarter where we did identify just 2 discrete items, that totaled at $38 million and we did change our -- the overall APB 23 assertion on those earnings. So what that does, that allows us to bring the cash back in, probably sometime in fiscal '13. We use that cash then in the U.S. and that will again limit the amount of additional borrower we may need to do under the revolver. Until we get to the point where we do launch these programs and eventually, we are going to be profitable and cash flow positive in the U.S. So it's more of a timing thing. And I think we'll look at this as a positive and to be able -- the ability to bring back that $38 million is I think a very -- just very helpful in the big picture to repatriate some of that cash back to the U.S. But leave the rest of it out there for reinvestment. Jeremy Hellman - Divine Capital Markets LLC, Research Division: Right. And your revolver is LIBOR plus 1.5, right? Douglas A. Koman: At the -- I know it's right here, remember? Donald W. Duda: [indiscernible] Douglas A. Koman: Currently, at the current rate? Yes, it is 1.5 of the current... Jeremy Hellman - Divine Capital Markets LLC, Research Division: Okay. And then just one last one the whole -- on that thread. The cash that you do have overseas, what currency is that denominated in? And where is it held right now? Douglas A. Koman: Sure. Again, there's a -- most of it is either going to be in euros or in Asia. We hold that in renminbi right now. Jeremy Hellman - Divine Capital Markets LLC, Research Division: Okay. And is there -- have you gone through any kind of an analysis on whether you would need a -- and what the cost would be of moving that from euros to Swiss francs or a non-euro currency? Douglas A. Koman: Yes. We're looking at -- we look at that all the time and we try to use the fact that we do have foreign subsidiaries in Europe, some are in U.S. currency denominated and some are euros denominated. So we try to use that to -- as a natural hedge to -- a hedge to the balance sheet. But we do watch that and we do -- we are looking at the renminbi in particular and that may be a case where the use of a forward contract or some derivative of some sort might make some sense for us. Jeremy Hellman - Divine Capital Markets LLC, Research Division: And with the euros, are they held at [Audio Gap] one depository institution? Douglas A. Koman: No. [indiscernible] described.

Our next question comes from the line of Brandon Smith [ph] with [indiscernible] Associates.

This question is for Doug. Where do you see your SG&A expenses moving across the next 2 years, like 2013, 2014? Douglas A. Koman: The SG&A as a percentage?

Yes. Douglas A. Koman: The next few years, probably should be modestly improving. As we grow the top line, they should not significantly have to add to the SG&A.

Okay. And also, it seems like your gross margins are looking to improve. And where do you see those? Like, do you have a number for that? Or... Douglas A. Koman: Well, we just talked in general about the improvement we're -- we will get from the vertical integration, so once we get this AMD acquisition vertically integrated. And we probably expect to get -- I think we've said, we're going to get 4% to 5% just under vertical integration alone. Donald W. Duda: In the Automotive area. Douglas A. Koman: In the Automotive, yes. And then beyond that, we'll get additional gross margin improvement as we start leveraging the overhead on the higher sales.

Our next question comes from the line of David Leiker with Robert W. Baird. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Yes. Just a couple of other items here. Don, as you've gone through the launches now, there's more people, other automakers that have seen what you've done there. I'm sure people are aware of what you may be doing with General Motors. What's the activity been with other automakers in terms of extending this product offering into other parts of the industry? Donald W. Duda: I would say, risk. The ability to successfully launch fairly complicated programs have been -- other OEMs have taken note around the world. So I think we've successfully -- prepared successfully and moved in to a new area, the vehicle, where there's a significant room for growth with others and to add technology because that's an area -- if you look at, if you go back 10 years ago where the wheel is kind of as the place to be and then the percent has gotten a little more or much more competitive, the center console is really the next avenue, where there's all sorts of technology that can brought to bear and that's really our strategy. To work with the OEMs, bring them technology that they might have, that's one example of that. We're working in biometrics, on different screens for the center console. So now, I think Methode has successfully made that transition and that's again, that's definitely been noted. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: So is there any sense of timing you might have of whether you could talk about some new contracts or new programs that you're working on? Donald W. Duda: No, I -- you know, Automotive -- it's up until a point we get an award, things are usually pretty -- under MDA, it's fairly confidential. So it'd be very difficult for me to comment on that. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: But, during this current fiscal year, you would expect to be able to announce something? Donald W. Duda: I -- David, I'm not going to go there. I just... David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Yes. And then any characterization in terms of the customers you're looking at, North American, European, Asian? Or any characterization there you can do at all? Donald W. Duda: Asia is clearly a focus for us. There's as much opportunity there as we've seen in the U.S. With Detroit, so that's certainly a focus. Europe, a bit less, that is not -- not that there's no programs to be had, but we have a definite focus on Asia. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Okay. And if I could have a couple of number questions. Your royalty number, I did my math, right? It looks like it's about $5 million for the year. Is that -- any sense now on where that number can run next year and then the following years after that on a trend basis? Douglas A. Koman: I think it's been running relatively stable. So I wouldn't expect that to change much. And that just really depends on the amount of business that we're doing primarily out of Europe. Because that's -- those are the design engineering piece that we get paid upfront for. So... David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then on tax, as you had mentioned, you expect it to be lower. Can you give us some framework there of -- any particular details in terms of where you think that's going be? And then quarterly, I suspect, you're going to continue to be pretty volatile? Douglas A. Koman: Yes. I think I've mentioned, looking at next year, we expect the tax rate, the effective tax rate, to be low- to mid-teens. And then that assumes, David, that we don't have any changes in the valuation allowances for either our net operating loss in the U.S. that we need to track and also for the investment tax credits that we have in Malta. So -- and those are -- those can change based on future projections. And so, it's hard to say sitting here today -- if I can tell you if it was going to change today, then I should have hooked it in the fourth quarter. So I guess the answer is we don't know that there's going to be any change on those. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: And then any addition of repatriation of cash other than what you've already talked about? Douglas A. Koman: No. Nothing else anticipated at this time. These were 2 discrete items that actually we look at. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then on the capital spending, a pretty significant number here again. How much of that is going for equipment as opposed to -- I don't think you have any physical expansions going on, do you? Douglas A. Koman: No, no. It's -- yes. The vast majority is equipment. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then lastly, great clarity in terms of where you think the numbers are going to be, how they're going to flow quarterly. If you look at where -- within that characterizations where the fourth quarter earnings would be,it would imply that you're going to exit your fiscal year on a run rate right around $1 a share or so. I mean is that the right characterization of that? Douglas A. Koman: The words no comment come to mind. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Yes, they do. But... Donald W. Duda: David, I do want to add something. While we are very excited about what the center console programs have brought to Methode, I would be remiss if I didn't point out that also the automakers have noted what we have done in the transmissions with our lead frames. And as transmissions become at 6 speed, 8 speed and beyond our process technology, I think you've seen them on the T-76 line, continues to generate interest and opportunities, not just from the lead frame but also from our torque sensing technology where we're about to launch in '15, the first Magneto-elastic product. So that's just -- Methode's kind of entered 2 areas over the -- it's taken us 3 to 4 years or maybe 5 years to get into those areas. But that's really 2 very growing areas of the Auto that Methode is well positioned in. So I would be remiss if I didn't mention transmissions. David Leiker - Robert W. Baird & Co. Incorporated, Research Division: Yes. It's interesting, I mean those are all things -- and you're right, it was about 4 or 5 years ago when we talked about this embryonic technologies and bring them to market. And a lot of of that has happened there today. Have you put any more irons in the fire that create additional embryonic technologies like that, that 5 years from now, we're going to be talking about? Donald W. Duda: I mean, you could look at Eetrex and power electronics and as -- and then you have to really decide where does the EV market go. We're certainly making a definite investment in that. And I mean I think we've seen just the tip of the iceberg on torque sensing. So that continues to expand. Those would be the 2 areas I would point to. I'm sure after I get off the call, somebody is going to remind me that I forgot a technology or 2. Biometrics in the vehicle, we believe that's coming. More sophisticated touchscreens, an area that we're working on. So I think those will be the key areas that come to mind.

Our next question's from the line of Gregory Macosko with Lord, Abbett. Gregory M. Macosko - Lord, Abbett & Co. LLC: Just with regard to the discussion about the higher prime cost which affects the gross margin percent, is that just generally a trend that we should expect that kind of across a lot of these programs that are being launched? Is that a general expectation? Or is that -- as I understand, that'll fall back as you integrate some of the operations, but talk about that a little bit, if you would. Douglas A. Koman: Sure. As the -- to go back in time, when we booked the initial Ford Center console program, which if memory serves me right, is in the '08 timeframe, Automotive was a free fall. And as was the economy for the most part. We elected that time not to vertically integrate, which is very unusual for Methode because it's a key process. But as you've seen, we've had to expend the significant moneys to in house that process. So back then, financially, it didn't make sense. And when we booked the additional program with Ford, at that point is when we started to look at vertically integrating. Because of the -- one of our drivers and how we look at our business is what is the prime cost. How do you reduce one, your exposure to outside suppliers, which in automotive as we've seen, one problem can cost you millions of dollars. So in general, Methode's belief is where we can and where it makes economic sense we vertically integrate to ensure that we don't run into those type of issues. Remember, our first foray into a significant center console program. And again, I know hindsight's 20/20, maybe we should have integrated that at the time. But now, as we move forward, we're launching GM. There's certainly outside suppliers. There's a touchscreen supplier but as a direct and sub from Ford. So that's a -- we have a little bit of cover there. But prime, as we move forward, should fall in line to what we've seen in the past because of the amount of energy and money that have been spent. Gregory M. Macosko - Lord, Abbett & Co. LLC: So the point is there's -- as we look at the programs you currently have and are launching -- that you have visibility on, there will be no additional in-sourcing going forward? Or once these are done, I mean. Donald W. Duda: Well, it's -- in terms of -- we've always looked at that. We are -- if I look at General Motors, I suppose we can add more [indiscernible] torque sensing capabilities, some of that's still going to be done on the outside. We would do that if that makes financial sense. There's always opportunities, but in terms of major opportunities, I would say, no. The painting is a significant portion of the bill materials for those parts. Gregory M. Macosko - Lord, Abbett & Co. LLC: With regard to the new programs and new products that you're developing, clearly, the center console, and to some extent, the transmission, are areas that you have experience with -- you're kind of on a ramp in terms of gain in programs because of the experience you've had with the historic ones. But are you comfortable that when you talk about biometrics, heat sinks, busbars, stationary storage, e-van, e-truck. Is this, in terms of your R&D and research budgets, just general capabilities on the research side? Are you comfortable with that number of programs across all 3 of your segments? Donald W. Duda: I would say that we are. We don't talk about the number of technologies or processes that we don't fund every year. We've opened to a fairly levered process. Generally, when we say R&D, I think we do the D than R, I mean we do the development. We take a known technology and apply it to our product. So in paint and laser etch, we didn't lead the way on that, that was a proven process that we assimilated in-house and we tend to ruggedize these processes and technology for the automotive market. TouchSensor is a good example, that was a known technology when we purchased TouchSensor from SCHOTT Glass, but we needed to ruggedize that to make it applicable on the vehicle. So when we look at -- and whether it be a busbar -- and now, we are launching busbars on EV vehicles in Europe. And why are we -- why didn't we invest in that in the first place? Because we had an on-trade -- or have to market in Auto from a Power standpoint. So we always look at what synergies do we have and does that make sense to us? And I often say, we're not going to go too far afield from what our base businesses are, which we've said is Interconnect, Auto and Power. And they do overlap. So I would say, we're definitely comfortable with the investments we're making. And we're not afraid to drop back and say, "Okay. This one didn't work out."

[Operator Instructions] Sir, we have no further questions in queue at this time. I'd like to turn the floor back over to management for any closing remarks. Donald W. Duda: Manny, thank you very much. We will thank everyone for listening today and for their questions and wish everyone a safe July 4th holiday. Good day.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.